Why gas exports dwarf domestic consumption

Nigeria is endowed with the largest confirmed gas reserve in Africa. It sits on well over 200 trillion cubic feet (tcf) of gas. However, 18 years of misplaced priorities and policy inconsistency have effectively sidelined Nigeria’s domestic gas consumers.

Consequently, Nigeria has one of the lowest domestic gas consumptions in Africa. While tiny and impoverished Senegal flaunts annual domestic cooking gas consumption of 9 million metric tonnes, Nigeria’s annual domestic cooking gas consumption stands derisively at 2.3 million metric tonnes.

The strange thing about Nigeria’s gas supply is that the country exports more gas than what is consumed at home. 

For instance, in the five years between 2022 and 2026, Nigeria exported a total of 4.56tcf of gas while 3.21tcf of gas was sold domestically during the period.

For the period under review, gas exports exceeded domestic supplies by about 42 per cent. The sidelining of domestic gas consumers has persisted despite 18 years of well-intentioned gas consumption policies like the National Gas Policy (NGP), Domestic Gas Delivery Obligation (DGDO), Petroleum Industry Act (PIA), Decade of Gas Initiative and Gas Swap Framework.

In 2016, Ibe Kachikwu, the Group Managing Director of then Nigerian National Petroleum Corporation (NNPC) who later became the minister of state for petroleum, announced what he called “cooking gas revolution”. It was designed to drive kerosene out of Nigerian kitchens and replace it with cooking gas in a bid to boost domestic gas consumption and conserve money spent on kerosene subsidy.

Kachikwu’s plan was to flood Nigerian kitchens with gas cookers. Not one of the promised appliance was delivered when Kachikwu was eased out of office in May 2019.

Despite the huge reserve of gas under its soil, Nigeria imports 1.5 million tonnes of cooking gas annually. 

That explains why cooking gas is cheaper in neighbouring Benin Republic than in Nigeria.

Nigeria imports gas with a weak naira that at a certain point in 2024 was trading at N1,700 to the dollar, while Benin Republic imports with a strong CFA franc.

Industry watchers blame Nigeria’s gas supply problem on inadequate processing and transportation infrastructure, poor pricing, payment insecurity and pipeline vandalisation. 

In fact, there is gross inefficiency in investment across the gas value chain.

The consequence is that gas shortages inhibit the nation’s power generation and engenders persistent collapse of the national grid.

The gas supply problem also fuels inflation in the country. Fertiliser and cement manufacturers, and other industrial users of gas are forced to depend on expensive diesel for their energy needs.

They build the high cost of energy into their products prices and inadvertently fuel inflation in the process. 

Another strange thing about Nigeria’s gas supply process is that in 2025 associated gas worth more than N800 billion was flared by oil companies in Nigeria. 

In developed economies, those who cannot build gas processing facilities re-inject the gas into the ground. Oil companies operating in Nigeria refuse to do that. They flare the gas and pollute the environment.

The debt contagion in the power industry is a major contributor to the supply problems in the nation’s gas industry. The 11 power distribution companies (DisCos) that rose from the ruins of the distribution arm of the defunct Power Holding Company of Nigeria (PHCN) are heavily indebted to the power generation companies (GenCos).

Consequently, the GenCos cannot pay the oil companies supplying them gas. That makes it difficult for the oil companies to pay their creditors and invest in gas processing facilities.

Another hindrance to domestic gas supply is pipeline vandalisation. The vandals have made the pipelines so unreliable that no one is willing to use them any longer. 

The laying of the pipelines on its own is a cost-intensive project. The oil companies are not interested in investing in pipelines that would at the end of the day be vandalised, while the gas is wasted.

Colman Obasi, President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), captured the spiraling effect of gas shortages in a recent interview.

“Gas shortages reduce the availability of gas-fired plants, contributing to lower electricity generation and unreliable supply. Manufacturers and other businesses are forced to rely on diesel and other alternative energy sources, thus increasing operating and production cost”, Obasi said.

Industry watchers contend that the gas supply problem cannot be solved by stopping exports. “Gas exports generate foreign exchange, but the domestic market must also be commercially attractive to secure adequate supply.

The solution is not to stop exports, but to make the domestic market competitive enough to attract supply while preserving export earnings, Bassey Essien, the Executive Secretary of Nigerian Association of Liquefied Petroleum Gas Marketers, said recently.

Blueprint.ng believes that since pipeline construction is a cost-intensive project, the Federal Government should provide pipelines and encourage the oil companies to build gas processing plants and storage facilities to reduce the supply constraints.